HMRC's MMTAR Phase Two Is Live: Tax Advisers Have 90 Days Before Sanctions Bite

The Clock Restarted on Tuesday

Phase one of HMRC's Modernising and Mandating Tax Adviser Registration (MMTAR) scheme closed on 18 August 2026. Phase two opened the same morning. That is not a coincidence: it is the architecture of a rolling compliance programme that leaves no gap between deadlines and no excuse for firms that have been watching from the sidelines.

The second window targets a substantially larger population: any tax adviser holding a Self Assessment or Corporation Tax account but without an existing Agent Services Account (ASA). They have until 18 November 2026. Payroll-only providers get a further reprieve, with their window running to 18 February 2027. Financial services organisations, after a separate lobby secured a deferral, do not face their deadline until 31 March 2027.

The numbers from phase one are instructive. HMRC confirmed that more than 4,000 applications were submitted and over 2,000 ASA accounts created during the first window, which targeted the smallest agent audience group. Phase two is bigger. The compliance burden is proportionally heavier, which means the processing delays the Law Society flagged in phase one are likely to worsen before they improve.

What Non-Compliance Actually Costs

Firms that miss their window face a graduated but serious sanction structure. HMRC can restrict an adviser's ability to interact with HMRC on behalf of clients while an application is still pending, but that grace only holds while a firm is actively in the queue. Advisers who continue operating without registering after being instructed to stop face financial penalties of £5,000 per contravention, rising to £10,000 in repeat cases, once a compliance notice has been issued. For a sole-trader accountant or a small advisory practice, that arithmetic closes quickly.

The Law Society put it plainly: failing to comply carries financial, operational, and regulatory consequences. A firm that loses HMRC interaction rights has its client retainer at immediate risk. TaxCalc, writing five days before the phase-one deadline, described that prospect bluntly: for most practices, it is an existential risk.

The scheme is not without design flaws. Parliament's Finance (No. 2) Bill scrutiny process surfaced concerns that more unscrupulous actors could simply route around the requirement, since registration only applies to those who interact with HMRC directly. A rogue adviser who never files anything themselves remains outside the net. The CIOT raised the point explicitly in written evidence: the compliance costs land on the compliant, while the genuinely problematic operators may not be captured at all.

The Minimum Standards Requirement Is the Hidden Trap

Registration is free. The standards attached to it are not.

Firms must be registered for anti-money laundering supervision before they can even submit an ASA application. They must identify named "relevant individuals" (typically senior managers or directors) within the legislation's definitions. Once registered, they must continue to meet those conditions on an ongoing basis. Suspension for failing to maintain standards carries its own separate sanction regime. The Finance Act 2026, which passed on 18 March, hardwired all of this into statute.

For multi-partner consultancies and tax advisory boutiques, the relevant-individual identification requirement is the one most likely to cause internal friction. Determining who counts, and ensuring that person's HMRC record, Companies House filings, and self-assessment details are all consistent, has already triggered processing delays for a number of firms in phase one. The Law Society is aware of those delays and has been raising them with HMRC directly.

HMRC is investing £36 million to modernise the underlying registration infrastructure. The existing system required separate codes for Self Assessment, Corporation Tax, PAYE, VAT, and CIS, each with its own paper-based route and lead times of up to 40 working days. MMTAR is supposed to replace all of that with a single digital process: a cleaner system in principle. In practice, the migration is live while the deadlines are also live, which is not a comfortable combination.

What This Means for the Advisory Market

The UK professional services market's trademark activity tells part of the story. Class 35 filings (the Nice class covering business management and advisory services) stood at 6,014 in 2026-Q3, down 44.3% versus the prior period, according to AIBD analysis of IPO (TMD) data as of August 2026. A contraction of that scale in brand-protection activity suggests that a significant number of advisory businesses are consolidating, exiting, or deferring investment decisions. A new mandatory licensing-adjacent regime arriving at the same moment adds friction to an already strained market.

The regulation has a commercial logic, regardless. HMRC's explicit goal is to reduce the tax gap partly by raising the floor on adviser quality. Registered advisers gain a cleaner identity in client relationships: a firm that can demonstrably show active HMRC registration and AML supervision has a verifiable quality signal that unregistered competitors cannot replicate. For firms that are already compliant, phase two is an opportunity to market that status.

The window closes 18 November. Ninety days. Firms with Self Assessment or Corporation Tax accounts that have not yet started the ASA application process should treat today as day one.